During the second quarter of 2009, company liquidations have increased across England and Wales, according to statistics from the governments Insolvency Service.

Over 3,500 companies took compulsory and Creditor’s Voluntary Liquidations (CVLs) during the quarter, which is an increase of 11.6 percent on the previous quarter and an increase of 15 percent year on year.

Malcolm Cohen, partner in business restructuring at BDO Stoy Hayward, says his firm has seen a higher amount of firms stop trading.

He said: “The credit crunch hit the financial sector last year and is now filtering through to consumer spending. We expect to see an even sharper increase in companies requiring restructuring plans or becoming insolvent in the next quarter.

“In order to make themselves more robust, companies need to ensure they don’t build up a large amount of credit. Also, with the market being so competitive they shouldn’t just be sitting around waiting for the phone to ring.”

Alan Tomlinson, partner at insolvency firm Tomlinsons, comments: “The upward trend in company liquidations was widely anticipated given the general economic slowdown affecting the owner managed business sector.

“Increases in administrations are partly due to the same reason but also reflect government policy of administration being the preferred method of dealing with insolvency and the fostering of the rescue culture.”

The government did however say that despite the gloomy figures, they are currently only half the levels of insolvency reached in the early 90s.

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